Ukiah to borrow another $4 mil for Costco work

The Ukiah City Council Wednesday voted unanimously to borrow another $4 million to pay for traffic improvements needed to bring a proposed Costco store to Airport Park Boulevard.

"It's about avoiding sprawl and retaining economic viability in the Redwood Business Park, which affects the entire city (and beyond)," said Council member Mari Rodin, referring to the City of Ukiah's attempts over the past several years to fill the empty parcels in the park. "I think we've done a really good job in planning for these things and being proactive in keeping the seat of Mendocino County strong."

Assistant City Manager Sage Sangiacomo said the city determined about 20 years ago that "securing the future of the Redwood Business Park" was a goal, and it has worked since then to keep "development within the park and discourage urban sprawl."

To achieve that, the city's former redevelopment agency bought 18 acres of vacant land in the park and intends to sell Costco about 15 acres of it. So far, Costco has applied to build a store there and the Environmental Impact Report (EIR) prepared for that project will go before the Ukiah Planning Commission next week.

However, Sangiacomo said, the city has also known for a long time that in order for the park to realize its potential, the roads leading to it would need to be improved, and it agreed to complete traffic mitigations as part of its negotiations with Costco.

To pay for those improvements, which include widening some intersections and adding signals to others, the Ukiah Redevelopment Agency sold several million dollars worth of bonds in March of 2011 in the hopes of being able to use some of the proceeds for the park's infrastructure.

Now, however, "those bond proceeds are currently in dispute with the state Department of Finance, and the likelihood that we're going to have resolution any time soon is not good," said Sangiacomo, explaining that staff is now recommending that the city borrow up to $4 million from the California Infrastructure and Economic Development Bank (I-Bank).

That amount will pay for widening the intersection of Airport Park Boulevard and Talmage Road, adding a signal at Airport Park Boulevard and Commerce Road, widening the intersection of Hastings and State streets and reconfiguring the off-ramps leading to Talmage Road from southbound Highway 101, which would include a new traffic signal.

"We are counting on paying (the loan) back with the increased revenues from Costco," Sangiacomo said, adding that City Manager Jane Chambers will not agree to the loan until "the Costco EIR is certified and that Costco has entered into a purchasing agreement."

He said the city is still working to "preserve our ability to use the bond proceeds as best we can," and that another requirement for the I-Bank loan will be that the city could pay it back early, "so we could potentially use those bonds to pay back this loan."

"This is the only way, in my view, to stop sprawl in our valley ... and while the majority of the people in the city don't love the big-box culture and our dependence on it, this keeps it corralled (on Airport Park Boulevard)," said Vice-Mayor Phil Baldwin, reminding the council that it voted unanimously in favor of selling the bonds in 2011 for the same projects. "I am angry that the state is denying us the right to use the bonds for the reason we borrowed the money for."

Council member Benj Thomas said he agreed with Baldwin, adding that he didn't see how the city was going to pay back the debt it was already in without borrowing more money.

"We're already massively in debt and to not move in this direction would be to saddle us with that debt with no way to pay it back," Thomas said.

In response, Sangiacomo said "the former URA is a separate entity, so the bond payments are not a debt of the city of Ukiah," adding that bringing a Costco to Ukiah would funnel a significant amount of money into the city and county that is currently being spent across the county line.

"The amount of leakage we have going to Sonoma County because of Costco means that we're paying for roads, parks, police, and social services in that county with our money," he said. "Costco is going to go a long way toward stopping that leakage."

Council member Mary Anne Landis said Costco "was a good employer" that would provide "some 150 to 200 good jobs," and the revenue it would bring in would be good for "all of the taxing jurisdictions in the county.

"Many in our community want it, and some people don't, but we're being responsive to the community at-large," she said.

When members of the audience addressed the council, one described the city performing the work as an "outright gift to Costco," and another said the decision of whether to borrow more money "should go to the voters of Ukiah."

Rodin said Costco shouldn't be expected to pay for the traffic improvements because those "would be something a developer would pay for, and we as the city have stepped into the developer role. (And to say) we wouldn't need the improvements if not for a Costco, is simply not the case. We can't complete the complete buildout of the park unless we expand the roads.

"It behooves the city to carefully take this risk," she said.

The motion to move forward with the loan then passed unanimously, as did the next item, which was approving the plans for the $3.9 million of projects and authorizing city staff to request bids for the work.

Justine Frederiksen can be reached at udjjf@ukiahdj.com, on Twitter @JustFrederiksen or at 468-3521.